After three years of growth, 2017 has seen the UK toy market suffer a 7% decline, a consequence of Brexit uncertainties and consumer disenchantment with the ever-shortening interludes between merchandise-friendly movie instalments.

In many ways, 2017 was always going to be a difficult year for UK retailers of all shapes, sizes and persuasions, with toy retailers unlikely to be exempt from the many challenges. To be fair, prior to the end of last year, the UK toy trade had enjoyed three consecutive years of significant growth, averaging out at about 6% each year. Comfortably outstripping inflation, this figure represented genuine category growth, something that every market aspires to.

There is, however, a long-held belief that the toy trade is largely immune to the boarder economic fluctuations and tribulations that trouble the rest of the retail world. While toys are not seen as necessarily essential purchases, neither are they deemed entirely frivolous, with the expectation being that parents would rather cut back on spending on themselves than spending on their children. In light of this, it has often been said that the toy trade is one of the last retail sectors to suffer from economic headwinds, while also being one of the first to pick up when conditions improve.

Nevertheless, the events of the past year have proved to be something of a game changer. The UK faces an uncertain future outside the EU, with the short-term implications of last year's referendum now beginning to make an impact. This has only been exacerbated by the outcome of the June general election and a renewed focus on the likely financial consequences of Brexit. Indeed, this may be the first time many people have truly focused on the tangible effect that leaving the EU could have on their own financial wellbeing.

As a consequence, consumer confidence is shaky, economic progress has slowed considerably and the pound has continued to fall against both the dollar and the euro. Inevitably, the combination of these factors has had an adverse effect on retail sales across the board, with the toy trade's lack of immunity clear to see. The 7% year-on-year decline in value sales recorded in July is a clear testament to this and marks the first time the UK toy market has suffered a first six month decline in sales since 2013.

Cars 3: Merchandise sales proved badly driven.

Cars 3: Merchandise sales proved badly driven.

Given such turbulent conditions, it is perhaps no surprise that a number of long-held toy market beliefs are now being challenged. While it has become something of a cliché to say that the outdoor toy sector enjoys a major boost when the sun shines, with all the recent data seemingly supporting this, this year has proven to be an exception. Despite a prolonged burst of glorious weather at the start of the summer, the outdoor toy sector was actually 5% down last month and is 6% down across the year-to-date. That equates to a not inconsiderable drop of some £18 million (US$23.2 million).

Similarly, many of the movie blockbusters expected to drive summer toy sales failed to deliver. In total, four major blockbuster movies were released at the start of the summer holiday season – Transformers: The Last Knight, Cars 3, Despicable Me 3 and Spider-Man: Homecoming. While all the signs pointed to a big merchandising boom, in what is traditionally a quiet period for the toy market, it never quite transpired. At least, not at the level anticipated.

This is despite the fact that none of the properties bombed. Indeed, the performance of several individual ranges was more than respectable, most notably Hasbro's core line of Transformers' products and Mattel's die-cast Cars' tie-ins. It is, however, fair to say that, overall, none of the movies' merchandise offerings in any way lived up to the hype.

With sales coming up short, theories abounded with regard to the unexpected shortfall. Perhaps, some said, there were just too many big movies released in too short a period. In the past, the release of four such major movies might have been expected to have been spread across a whole year, rather than over just four weeks.

A surfeit of Star Wars: No longer a Force to be reckoned with.

A surfeit of Star Wars: No longer a Force to be reckoned with.

Indeed, one retailer professed to being somewhat exhausted by this year's relentless movie schedule, admitting that he will be cutting back on the number of movies he supports next year. His major concern, though, is that not enough time is being allowed between the various instalments of movie franchises, with Star Wars singled out as the prime culprit.

Seemingly endorsing this notion, The New York Times recently ran an article highlighting the phenomenon of Star Wars fatigue. It's a problem few anticipated when Disney originally announced its plans to release a new instalment of the franchise every year for seven years. Back then, licensees and retailers were simply excited at the prospect of new content sustaining consumer interest and maintaining sales momentum over such an extended period.

Baulch: “Somewhat exhausted.”

Baulch: “Somewhat exhausted.”

Unfortunately, the reality has been very different. With new Star Wars offerings coming along with greater frequency than many regional bus services, not only has the merchandise from the previous film still been on the shelves, but many parents have been reluctant to buy more toys based around the same property. While it's obviously different in the case of older tweens and teens/adult collectors, many of whom are buying movie merchandise for themselves, parental purchases are still vulnerable to the haven't-you-already-got-enough-of-those syndrome.

In light of this, one prominent UK retailer has apparently asked licensees not to sell him any Star Wars merchandise next year. Instead, he has earmarked 2018 as an opportunity to work his way through a product bottleneck dating back to 2015's The Force Awakens and 2016's Rogue One.

Ultimately, few would disagree that the combination of movie overkill and sequel fatigue has diluted sales. It could be, then, that the fact that 2018 isn't being sold as a big year for movies might prove to be a blessing. Perhaps a year's break from the usual surfeit of blockbusters will rebalance the market and rekindle enthusiasm for 2019's rather more packed slate, which already includes Toy Story 4, Frozen 2 and yet more Star Wars.

While all of this might sound a bit gloomy, it's worth remembering that, compared with other retail sectors, the toy market is holding up relatively well. Given the challenges the UK economy has had to contend with in the past 12 months, it is perhaps surprising that year-on-year toy sales are only down 2%.

With the key sales period still to come and some great new ranges about to hit the shelves, there even remains a possibility that the market will recover during the second half of the year. If the first half of the year has taught us anything, however, it is the wisdom of expecting the unexpected. It could still be the case that all we thought we knew no longer applies in this bold new Brexit-bound, franchise-fatigued world.

John Baulch is the Publisher of Toy World,the leading trade title for the UK and European toy trade

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